Health Insurance: How Does It Work?
Yonatan Zunger

Nice summary Yonatan!

Your article really only covers half of the problem. The ACA also sets up some very strange incentives to drive up costs of healthcare. Insurers are required to spend 80–85% on healthcare or quality improvement activities. This in general sounds like a good idea but in practice it means that the more insurance companies spend on care the more they can charge and the more they keep. The ACA also does not allow medicaid to negotiate with drug companies. It is easy to see this problem by watching commercials about drug treatment, catheters, knee braces etc. There have been a number of suggestions like paying doctors and hospitals for the number of people they care for based on the health of those patients (pay for quality care) which also reduces the incentive to spend on unnecessary tests or treatments. Although it also sets up the incentive to find and care for younger and healthier patients, and to spend less on needed tests and care to get paid more (one very odd result is that a dead patient pays better than a live sick one). The current hospital model also doesn’t make sense when treatment at home is more effective, caries fewer risks, and costs much less. There are ideas around allowing trained nurses to provide higher levels of care, and urgent care centers are supposed to allow good care for lower prices. In practice the US pays way more for healthcare and receives lower quality care. Any system that does not address to cost of care in the USA is going to fail no matter what insurance model is followed.

I used to be a big fan of the ACA until Obama dropped the cost controls on drug companies and hospitals. (remember the controversy about death panels) I am currently covered by an ACA plan but the premium is about the same as a mortgage payment and we have a 12K deductible. It made me realize that the problem is cost containment in our healthcare system and the ACA only stopped the market from crashing sooner.

To solve the problem we need to address costs, remove incentives to spend more, increase incentives to provide better care, add technology to make treatment choices and costs more transparent, to encourage wellness care, reduce the costs of delivering care, and then find the right model to share those costs.